Microelectronics enable many of our most critical national defense capabilities, including artificial intelligence, unmanned vehicles, aircrafts, and space systems. As the Department of Defense, civilian government agencies, and Congress refine their strategy to support the domestic industrial base for microelectronics, it is important to incentivize companies so they can justify keeping their businesses focused on the defense market, resisting the allure of foreign incentives, and serving as a merchant supplier to ensure the best available chips on the market are available to the warfighter.

An increasing number of consumer products, particularly those considered to be in the internet-of-things category, require microelectronics. Those utilized by our nation’s warfighter are often even more sophisticated than commercial parts to include key attributes, such as the ability to resist radiation in space, move information near instantaneously, and control electrical power. The performance of microelectronics can often be derived from invisible features that require high precision manufacturing operations and highly skilled scientists, engineers, and technicians to operate them. Although the global market for semiconductors was expected to be well over $400 billion in 2020, only a small fraction (typically less than 1%) of that comes from defense demand. It is, therefore, very difficult for business leaders to deploy capital based on the business case of serving the defense market. Further complicating this paradigm are issues with tax and trade policy, the work force, intellectual property, and environmental regulations. This inability for domestic institutions to secure capital and self-finance growth strategies, coupled with few incentives from the federal government threaten the U.S.’ technical leadership.

Maintaining a healthy U.S. industrial base is only one of the benefits of this additional investment. Security is a growing concern, not only in defense systems, but in the financial, medical, and automotive markets. At all stages of the Integrated Circuit lifecycle, there are a number of threats that compromise the integrity of the design through piracy, reverse engineering, hardware Trojan insertion, physical attacks, and many other threats. Sending the U.S.’ most sensitive semiconductor designs off-shore for fabrication is the most notable challenge, specifically with Intellectual Property (IP) theft and tampering.

In response to this threat, DoD leaders in the Trump Administration prioritized the research and development of microelectronics, even making it the highest priority for the Undersecretary of Defense for Research & Engineering. While investments already underway by the DoD, such as the Electronics Resurgence Initiative (ERI) and the Microelectronics for Innovation and National Security (MINSEC) will certainly help government and technical leaders overcome technical challenges at the physical limits of microelectronics, additional funding is also necessary to support manufacturing. The Biden-Harris Administration should build on the DoD’s commitment to develop advanced microelectronics by not only continuing to increase funding into R&D, but also by providing incentives for businesses to keep manufacturing facilities within the United States.

As demonstrated recently, the Defense Production Act (DPA) Title III authorities play an important role in preserving essential industrial capabilities. Utilizing funds from the previous defense appropriations bill and the CARES Act, the DoD initiated several important DPA Title III projects to secure the supply of industrial resources and capabilities ranging from strategic materials, such as rare earth metals, to large systems, such as Navy shipbuilding. Going forward, microelectronics should be even more of a centerpiece investment for this and other industrial base programs. Domestic companies, particularly small companies that serve as merchant suppliers, often find it difficult to secure the financing they need to maintain operations domestically. Investors seeking a return-on-investment prioritize short-term capital needs and entertain offers from foreign investors. While the Committee on Foreign Investment in the United States, also known as CFIUS, can prevent mergers and acquisitions of domestic companies critical to national security to overseas companies and the Trusted Capital Marketplace can connect financiers to those seeking investment, direct incentives are needed to keep investors comfortable with entering and serving the defense market. This supports domestic manufacturing capacity, as well as ensures innovation remains stateside. A comprehensive strategy that includes substantive investment into manufacturing technology development and capacity expansion, while also addressing other policy and trade issues needs to be developed quickly.

Although it is impossible to predict which weapons will be necessary to deter and engage the U.S.’ adversaries in the future, we can be certain that microelectronics will be critical to those weapons. The outgoing undersecretary of defense for acquisition and sustainment, Ms. Ellen Lord, stated in the fall of 2020 that the U.S. microelectronics industry was at an “inflection point.” I hope the Biden-Harris Administration agrees with this sentiment and takes immediate, decisive action to not only support the development of next-generation microelectronics for defense applications, but also the manufacturing. As industrial base leaders say, if you can’t build it, build it affordably, reliably, and in a timely manner, you don’t have it.